Atlanta Stadium for Falcons Prompts Bond Fight

The Atlanta Falcons face the Green Bay Packers during a 2011 NFC divisional playoff game at the Georgia Dome in Atlanta, Georgia, on January 15, 2011. Photographer: Kevin C. Cox/Getty Images

April 11 (Bloomberg) -- Home Depot Inc. co-founder Arthur
Blank, having bought the Atlanta Falcons, is getting help from
the city to build a $1.2 billion football stadium to replace a
venue that a skeptic noted is barely older than Miley Cyrus.

The billionaire said his ambition to bring another Super
Bowl to town rides on replacing the Georgia Dome, which opened
in 1992, with funds including $200 million in taxpayer money.
Neighborhood critics say a city-adopted plan unfairly burdens
residents of two predominantly black neighborhoods. Vine City
and English Avenue are areas steeped in the city’s civil rights
history, and where the Reverend Martin Luther King Jr. brought
his family to live in 1967.

The project calls for demolishing the city’s first black
Baptist church, and turning the street named after King into a
dead-end for stadium VIP parking.

A group of community leaders, including three activists and
a retired Baptist minister, won a court ruling in February
allowing them to intervene in the city’s bond process.
Yesterday, in state court in Atlanta, they argued against the
city’s financing plan.

Superior Court Judge Ural Glanville limited the arguments
to the bonds and barred testimony about the stadium’s potential
impact on the neighborhoods. He didn’t issue an immediate
ruling.

“It’s not that these are not important issues,” Glanville
said at the start of a six-hour hearing. “It’s just that what I
can consider in a bond validation hearing is limited.”

Economically Obsolete

Georgia law requires court approval before government
general-obligation revenue bonds can be issued. The judge will
weigh whether the bonds, backed by hotel taxes, are valid.

“It’s not too hard to be skeptical about this, when you
have a stadium only two months older than Miley Cyrus being
declared economically obsolete,” said Victor Matheson, a
professor and sports economist with the College of the Holy
Cross, in Worcester, Massachusetts, referring to the 21-year-old
singer. “This is the youngest stadium to be abandoned that I
can think of in recent memory.”

The group taking the city to court says that under the
right circumstances, it doesn’t oppose a new home for the
National Football League team. It says pledges made before the
Georgia Dome opened weren’t kept.

“We were promised back then that we would be made whole,
and not a dime was available for poor folk,” William Cottrell,
ex-pastor of the 125-year-old Beulah Baptist Church in Vine
City, said of the city’s vow to invest millions of dollars into
the neighborhood when the Georgia Dome was being built about 22
years ago. “We’re not going to let them do that this time
without some problem.”

Hotel Tax

The residents’ legal argument hinges on the claim that
extending the city’s hotel tax to repay the bonds
unconstitutionally turns a general law, applicable statewide,
into one governing a single project. The city says in court
filings that the bonds are authorized by state law and the
plan’s use of 39 percent of the hotel tax is appropriate.

A neighborhood-impact study requested by the objectors is
unnecessary, the city’s lawyers said March 27 in court papers.

No Witnesses

Attorneys for the city called no witnesses during
yesterday’s hearing, telling Glanville that he could decide the
case on the evidence presented in court filings. Glanville
refused to allow lawyers for the residents to call witnesses
from the community.

“We were disappointed our witnesses were not allowed to
show the human side of this,” Thelma Wyatt Moore, a retired
state court judge who represents the challengers, said after the
hearing.

Glanville’s decision to exclude impact testimony could be
grounds for appeal if he validates the bonds, Moore said.

Douglass Selby, an attorney for the city, countered that
the neighborhood activists had other avenues to challenge the
stadium’s impact, including administrative appeals.

“The law is very clear on what the bond validation process
is for,” Selby said.

The new stadium is expected to create more than 1,400 jobs
and bring in $155 million in annual revenue, according to the
city.

Blank’s pursuit of a new stadium has been at least eight
years in the making. He proposed a revised financial arrangement
with the state’s stadium operator in 2006, citing the need to
compete with other teams.

Remodeling Job

The ex-Home Depot chairman told the New York Times in 2012
that the Dome, then 20 years old and the site of Super Bowls in
1994 and 2000, wasn’t right for a remodeling job.

Blank, like some other team owners seeking public funding,
suggested he would go elsewhere, as did the Atlanta Braves
baseball team, which is leaving for the city’s northern suburbs.

In January 2013, in discussions with the City Council,
Blank said he had been courted by Los Angeles business leaders
about moving there, the Atlanta Business Chronicle reported.

Less than two months later, Atlanta approved a financing
deal to replace the Georgia Dome about two miles west of
downtown.

Blank’s wealth is an estimated $1.8 billion, according to
Forbes magazine’s list of the richest Americans. He bought the
Falcons in February 2002 for $545 million and owns the Georgia
Force, an Arena Football League team.

Big Events

He has said the city needs a new stadium to attract a Major
League Soccer team as well as big events, including the National
Football League’s Super Bowl and soccer’s World Cup.

The stadium bonds would be issued by the Atlanta
Development Authority and repaid through the hotel tax. The City
Council also agreed to dedicate hotel tax revenue beyond the
bond payments to operating the new publicly owned stadium.

That might generate an additional $900 million over 30
years, the neighborhood challengers said in court documents
citing the bond filing. Although the stadium will be state-owned
through the Georgia World Congress Center Authority, the Falcons
will operate it and keep stadium revenue under a licensing
agreement that requires the team to pay an annual rent of $2.5
million.

“We have full confidence that our partners at the city,
Invest Atlanta and the GWCCA will appropriately handle these
challenges,” Kim Shreckengost, a spokeswoman for AMB Group LLC,
the Falcons’ parent company, said in an e-mail, referring to the
Georgia World Congress Center Authority.

$15 Million

The Arthur M. Blank Family Foundation has committed to
investing $15 million to improve the quality of life in
neighborhoods around the stadium in addition to $15 million from
the city, she said.

“We also hope to leverage additional public and private
funds in our efforts,” she said.

City Council President Ceasar Mitchell said he supports re-examining the financing after community groups called for
reversing of votes of approval. He said he’ll support “any
necessary” changes in the agreement.

U.S. cities are on the hook for at least $10 billion of
sports stadium bonds, with at least one-fourth for the NFL,
according to data compiled by Bloomberg.

The numbers are forcing Atlanta and other cities, including
Tampa, Florida, and Oakland, California, to weigh the cost of
subsidies and community opposition against the political and
economic win of retaining professional sports teams that
explicitly or implicitly threaten to leave town.

Fearing Loss

“When the fear is really losing the team altogether,
people tend to buckle,” Matheson said.

The stadium-plan opponents think they can reverse the
city’s decision or delay the project indefinitely, forcing
renegotiations, said John Woodham, an attorney who represents
the neighbors with Moore. They will appeal if they lose
Glanville’s ruling, he said.

The stadium is to be built next to the Georgia Dome and
completed in 2017.

The plans for Martin Luther King Drive essentially isolates
English Avenue and Vine City from the rest of downtown, Moore
said.

“This project in its concept and configuration is shoving
out the community and turning its back on the community,” she
said. “The community should share in the bounties that are
being conferred on the Falcons. We have no opposition to a
stadium under the right circumstances.”

Vine City

Settled in the 19th century by large landowners, the
neighborhoods on the western edge of downtown Atlanta began with
segregated subdivisions, schools and churches.

Herman Cain, who sought the Republican nomination for
president in 2012, went to school on English Avenue, according
to the Vine City Health and Housing Ministry. The civil rights
leader Julian Bond, the first president of the Southern Poverty
Law Center, who also served seven years in the Georgia
Legislature, also lived in the neighborhood.

Bond’s son, Michael Julian Bond, an Atlanta City Council
member, voted for the stadium plan.

“We didn’t have any leverage to force them to agree to
anything,” Bond said in a phone interview, referring to the
team. “We can ill afford to lose the team.”

The city did nothing wrong in its financing deal, Bond
said.

Groundbreaking on the new stadium is to take place in May,
said Jennifer LeMaster, a spokeswoman for the World Congress
Center Authority.

Retractable Roof

The eight-sided stadium will have 71,000 seats, about the
same as the Georgia Dome, with a transparent retractable roof
and upper concourse windows that can be opened to create the
feel of an outdoor facility, according to plans unveiled in
October.

The center is overseeing construction of the stadium and is
establishing new personal seat licenses to be marketed by the
Falcons with the revenue contributed to the public-financing
portion of the stadium costs, according to bond documents.

The legal challenge won’t affect construction plans,
LeMaster said. “The project is on schedule and substantive
construction work is already under way,” she said.

More than two decades after the Georgia Dome’s birth, the
neighborhoods still need low-income housing, a parish nurse and
a community school, said Cottrell, the ex-Vine City pastor. Jobs
for local residents at the stadium would be a bonus, he said.

Braves’ Move

Atlanta approved the football stadium plan without
extending similar support to Major League Baseball’s Braves,
whose Turner Field was built for the 1996 Summer Olympics.

The Braves in November announced plans to build a $672
million stadium in suburban Cobb County. The 42,000-seat venue
will be paid for in part with $450 million in public funds, Reed
said in November. The city was unwilling to use public money for
a new stadium and wished the Braves well in their future home,
the mayor said.

The city couldn’t afford to finance two deals at the same
time, Carlos Campos, a spokesman for the mayor, said in an e-mail.

“It has nothing to do with choosing one team over the
other, ” Campos said. “Cobb County offered the Braves more
than we were willing to provide.”